A Letter to the Reader xxvii About the Authors xxix Preface xxxi About the Online Resources xxxiii Book Citations xxxv 1 Definition of and Rationales for Tax- Exempt Organizations 1 § 1.1 Definition of Nonprofit Organization 1 (a) Nonprofit Organization Defined 2 (b) Nonprofit Sector 3 § 1.2 Definition of Tax- Exempt Organization 4 § 1.3 Tax- Exempt Organizations Law Philosophy 6 § 1.4 Political Philosophy Rationale 8 § 1.5 Inherent Tax Rationale 15 § 1.6 Other Rationales and Reasons for Exempt Organizations 16 § 1.7 Freedom of Association Doctrine 18 2 Overview of Nonprofit Sector and Tax- Exempt Organizations 21 § 2.

1 Profile of Nonprofit Sector 22 § 2.2 Organization of IRS 25 (a) IRS in General 26 (b) Tax Exempt and Government Entities Division 27 (c) Restructuring of IRS 28 3 Tax Exemption: Source and Recognition 31 § 3.1 Source of Tax Exemption 31 § 3.2 Recognition of Tax Exemption 33 (a) General Rules 34 (b) Concept of Recognition 35 § 3.3 Recognition of Public Charity, Private Foundation Status 36 § 3.4 Alternatives to Tax- Exempt Status 37 4 Organizational, Operational, and Related Tests and Doctrines 39 § 4.1 Forms of Tax- Exempt Organizations 40 (a) General Rules 40 (b) Check- the- Box Regulations 42 (i) Basic Rules 42 (ii) Exempt Organization Rules 43 § 4.2 Governing Instruments 44 § 4.

3 Organizational Test 45 (a) Statement of Purposes 45 (b) Dissolution Requirements 48 (c) Mission Statements 51 (d) Board Composition 51 (e) Rules for Limited Liability Companies 51 § 4.4 Primary Purpose Test 52 § 4.5 Operational Test 57 (a) Basic Rules 57 (b) Activities Tests 61 (c) Quantification of Activities 61 (d) Action Organizations 62 (e) Aggregate Principle 64 § 4.6 Exclusively Standard 64 § 4.7 Commensurate Test 67 § 4.8 State Action Doctrine 68 (a) Doctrine in General 68 (b) Doctrine as Applied to Social Clubs 70 (c) Doctrine and Other Exempt Organizations 71 (d) Statutory Law 73 § 4.9 Commerciality Doctrine 73 (a) Summary of Doctrine 74 (b) Assumption Underlying Doctrine 74 (c) Origin of Doctrine 74 (d) Focus on Publishing 75 (e) Other Applications of Doctrine 76 (f) Elements of Commerciality 77 (g) IRS Ruling Policy 78 (h) Contemporary Perspective on Doctrine 80 § 4.10 Social Enterprise Developments 83 (a) Concept of Social Enterprise 83 (b) Program- Related Investments 84 (c) Low- Profit Limited Liability Companies 85 (d) B Corporations 85 (e) Benefit Corporations 85 (f) Flexible Purpose Corporations 85 5 Nonprofit Governance 87 § 5.

1 Boards of Directors Basics 87 § 5.2 Board Composition and Tax Law 88 § 5.3 Board Duties and Responsibilities 89 (a) Duty of Care 90 (b) Duty of Loyalty 90 (c) Duty of Obedience 90 § 5.4 Board Member Liability 91 § 5.5 Sarbanes- Oxley Act 91 § 5.6 Nonprofit Governance Principles 92 (a) Governance Philosophy in General 92 (b) Inventory of Sets of Principles 92 (i) Legal Compliance and Public Disclosure 93 (ii) Effective Governance 94 (iii) Financial Oversight 95 (iv) Responsible Fundraising 96 (c) Form 990 Approach to Governance 96 (d) Boards of Credit Counseling Organizations 97 § 5.7 IRS and Governance 97 (a) Matter of Agency Jurisdiction 97 (b) IRS Officials'' Speeches 99 (c) IRS Ruling Policy 101 (d) IRS Training Materials 104 (e) IRS Governance Check Sheet 105 6 Concept of Charitable 107 § 6.1 Federal Tax Law Definition of Charitable 108 (a) Popular and Ordinary Definition 108 (b) Common Law Definition 108 (c) Federal Tax Law Definition 110 § 6.

2 Public Policy Doctrine 114 (a) General Principles 114 (b) Race- Based Discrimination 115 (i) Supreme Court Pronouncement 116 (ii) IRS Policy 116 (iii) Broader Policy Impact 118 (c) Gender- Based Discrimination 119 (d) Other Forms of Discrimination 120 (e) Affirmative Action Principles 121 § 6.3 Collateral Concepts 124 (a) Requirement of Charitable Class 124 (b) Means- to- End/Instrumentality Rule 127 (c) Charity as Evolving Concept 129 (d) Motive 129 (e) Private Use 130 (f) Cy Pres Doctrine 131 (g) Fluid Recovery Principles 132 (h) Charging of Fees 134 (i) Illegal Activities 134 § 6.4 What Tax Exemption Does Not Create 136 7 Charitable Organizations 139 § 7.1 Relief of Poor 140 § 7.2 Relief of Distressed 142 (a) General Principles 142 (b) Disaster Relief Programs 142 (i) General Guidance 144 (ii) Public Charities 146 (iii) Donor- Advised Funds 146 (iv) Private Foundations 147 (v) Private Letter Rulings 148 § 7.3 Credit Counseling 148 (a) Initial Evolution of Exemption Law 149 (b) Statutory Criteria for Exemption 150 § 7.4 Provision of Housing 151 § 7.5 Down Payment Assistance 153 § 7.

6 Promotion of Health 154 (a) Hospital Law in General 155 (b) Additional Statutory Requirements for Hospitals 157 (i) Hospitals Subject to Requirements 157 (ii) Community Health Needs Assessments 158 (iii) Financial Assistance Policy 158 (iv) Emergency Medical Care Policy 159 (v) Limitation on Charges 159 (vi) Billing and Collection 159 (vii) Mandatory IRS Review of Tax Exemption 159 (viii) Effective Dates 160 (c) Hospital Clinical Departments and Funds 160 (d) Medical Research Organizations 161 (e) Homes for Aged 161 (f) Health Maintenance Organizations 162 (g) Integrated Delivery Systems 164 (h) Peer Review Organizations 165 (i) Fitness Centers 167 (j) Other Health Care Organizations 168 (k) Regional Health Information Organizations 170 (l) Health Insurance Exchanges 171 (m) Accountable Care Organizations 173 (i) ACOs in General 173 (ii) Tax- Exempt Organizations Issues 174 7.7 Lessening Burdens of Government 176 § 7.8 Advancement of Education 180 (a) General Principles 180 (b) Scholarship Grants 184 § 7.9 Advancement of Science 185 § 7.10 Advancement of Religion 185 § 7.11 Promotion of Social Welfare 187 § 7.12 Promotion of Arts 190 § 7.13 Consortia 192 (a) General Principles 192 (b) Adjunct Theory 194 (c) Cooperative Arrangements 195 § 7.

14 Fundraising Organizations 197 (a) General Principles 197 (b) Application of Commensurate Test 199 (c) Other Exemption Issues 200 § 7.15 Government Entities as Charitable Counterparts 202 § 7.16 Other Categories of Charity 206 (a) Environmental Protection 206 (b) Promotion of Patriotism 207 (c) Promotion of Sports 208 (d) Public Interest Law 208 (e) Local Economic Development 210 (f) Other Charitable Organizations 212 § 7.17 Qualified Opportunity Zones 213 § 7.18 Charitable Grants to Individuals 214 8 Educational Organizations 215 § 8.1 Federal Tax Law Definition of Educational 215 § 8.2 Education Contrasted with Propaganda 216 § 8.3 Educational Institutions 219 (a) Schools, Colleges, and Universities 220 (b) Museums and Similar Organizations 223 (c) Other Educational Organizations 225 § 8.

4 Instruction of Individuals 225 § 8.5 Instruction of Public 229 § 8.6 Educational Activity as Commercial Business 233 § 8.7 Educational Activity as Private Benefit Function 237 § 8.8 Child Care Organizations 237 9 Scientific Organizations 239 § 9.1 Federal Tax Law Definition of Science 239 § 9.2 Concept of Research 240 § 9.3 Requirement of Public Interest 243 § 9.

4 Scientific as Charitable or Educational 244 § 9.5 Technology Transfer 244 10 Religious Organizations 247 § 10.1 Constitutional Law Framework 248 (a) General Constitutional Law Principles 248 (i) Free Exercise Clause 248 (ii) Establishment Clause 250 (iii) Religious Freedom Restoration Act 253 (iv) Free Speech Considerations 253 (b) Constitutional Law and Tax Exemption 254 (c) Internal Revenue Code Provisions 256 § 10.2 Federal Tax Law Definition of Religion 258 (a) Religion Defined 258 (b) Bases for Denial of Tax Exemption 262 (c) Abuse of Tax Exemption 263 § 10.3 Churches and Similar Institutions 265 (a) General Principles 265 (b) Associational Test 269 (c) Principle of Respect for Autonomy 272 § 10.4 Conventions or Associations of Churches 273 § 10.5 Integrated Auxiliaries of Churches 273 § 10.6 Mission Societies 275 § 10.

7 Religious Orders 276 § 10.8 Apostolic Organizations 277 § 10.9 Communal Groups 279 § 10.10 Retreat Facilities 280 11 Other Types of Charitable Organizations 281 § 11.1 Cruelty Prevention Organizations 281 § 11.2 Amateur Sports Organizations 281 § 11.3 Public Safety Testing Organizations 283 § 11.4 Cooperative Hospital Service Organizations 284 § 11.

5 Cooperative Educational Service Organizations 286 § 11.6 Charitable Risk Pools 287 § 11.7 Lite.